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Efficiency of Islamic Rural Banks (BPRS) in East Java Province, Indonesia

Tazkia Islamic Finance and Business Review

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Title Efficiency of Islamic Rural Banks (BPRS) in East Java Province, Indonesia
 
Creator Sadono, Endiarjati Dewandaru; Universitas Gadjah Mada
 
Subject Islamic rural bank (BPRS); Stochastic Frontier Analysis; Technical Efficiency
 
Description Abstract. This study aims to measure technical efficiency and identify factors that affect technical inefficiency of Islamic rural banks (BPRS) in East Java Province, Indonesia. We also want to test whether BPRS operating in districts are more efficient than those operating in cities. Data that we use are unbalanced panel data from 2011 until 2016 using stochastic frontier analysis. This study has successfully identified that the technical efficiency of BPRS operation is 90.12 percent. It means that there is still about 9.88 percent that can be optimized to improve their performance. Factors that cause technical inefficiency are Capital Adequacy Ratio (CAR) and Net Performing Financing (NPF). To improve technical efficiency of BPRS operations, the effort that must be made is to ensure each BPRS has sufficient capital stock to be channeled into loans. In addition, BPRS should also ensure the risks of bad loans are minimum.
 
Publisher Institute for Research and Community Empowerment (LPPM TAZKIA)
 
Contributor —
 
Date 2018-03-31
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://tifbr-tazkia.org/index.php/TIFBR/article/view/103
10.30993/tifbr.v11i1.103
 
Source Tazkia Islamic Finance and Business Review; Vol 11, No 1 (2017)
2460-0717
1907-8145
10.30993/tifbr.v11i1
 
Language eng
 
Relation http://tifbr-tazkia.org/index.php/TIFBR/article/view/103/116
 
Rights Copyright (c) 2018 Author and Publisher
http://creativecommons.org/licenses/by-nc-sa/4.0